HARARE – Reserve Bank of Zimbabwe Governor John Mangudya said on Friday he would never do anything that would hurt the country, vowing that the central bank would not overprint the bond notes.
Mangudya made the remarks in Harare at a ceremony to mark the official closure of the 2016 tobacco marketing season hosted by the Tobacco Industry and Marketing Board (TIMB).
He said the central bank was only trying to manage the economy under very difficult circumstances and never intended to let the people of Zimbabwe down.
The government had learnt from its mistakes and now knew what to do and what not to do, he said.
“I believe in servant leadership. I am there to serve Zimbabwe not to be served by Zimbabwe. So whatever I do as a policy measure is just because we think Zimbabwe requires such things. And the issue about over-printing does not arise because there are two safety measures,” he said.
“The first one is that if there
Mangudya said the the $200-million to be put into circulation was too little to cause inflation.
“What causes inflation are high-value notes. Moreso what causes inflation is the quantity of money in circulation. This economy doesn’t have too much money. We can say this economy has far less than $10-billion and that $200-million won’t cause inflation,” he said.
He said the bank had also responded to concerns raised by citizens and printed the notes in smaller denominations.
“And when people complained, when they were skeptical about them, we made a change that they will only be in twos and fives; these are small denominations and small denominations throughout the whole world do not cause inflation because they are too small to cause inflation.”
Mangudya said the central bank had proved through bond coins, which have been in circulation for three years now, that it did not have a penchant for printing money just for the sake of it.
It was a pro-poor facility meant to provide change as people were being given sweets and other small things they did not need as change.
“We put in place a facility of $50-million, to protect those coins, up to now we have only done $15-million. We don’t have an appetite for just printing them because the money is there, no. In the whole economy of Zimbabwe we have only $15-million coins.” he said.
“We never got that motivation, that excitement to say because Afreximbank has given us $50-million let’s just print them; for what?”
Mangudya said the bond notes would not be printed in any quantity more than the $200-million facility that backed them.
“That is why we said no, let’s have another facility to protect the integrity of the bond notes. It’s now like promissory notes, we give you those notes then they circulate in the economy, when we have got more of them we will buy back those notes, we draw from our facility and make sure to get the foreign currency. So these are one way of increasing reserves in this economy,” he said.
“The question is: can we trust you to say what you are saying is what happens? … Yes mistakes were made, yes things happened, but don’t judge us because of our history. If we do that, we will never go anywhere as a country.”
Africa News Agency